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This is strictly a Medicaid issue. I don't dismiss 10% of the market that casually. I was hoping that ANIP might be able to have the Medicaid market for itself. which seems to have been Arthur's often expressed hope about saving the government money with Corti. Let's see what happens. It's just speculation until we have a succesful filing. In the meantime, MNK is in a solid monopoly position with Acthar and its financial woes behind it.
I'm digging more into the MNK filing, because it is so relevant for us.
The CMS suit on Medicaid overpricing was a $600M verdict on appeal, with a requirement that MNK use historical pricing as the baseline to sell Acthar under Medicaid. The cash part is easy. Now CMS will get $250M over 7 years.
The shock to me, and relevant for ANIP, is that MNK can now use Acthar 2020 pricing as its Medicaid baseline under this settlement. I was hoping MNK would be stuck with historic pricing and leave Medicaid open to ANIP, (although it's never been clear to me what baseline price ANIP would be forced to use, because the base price does not change with an sNDA from the NDA price, or 1990 if later).
Except for MNK shareholders, who get Zip, this is an incredibly favorable settlement for MNK. There's nothing good here for ANIP as I read it, but time will tell.
Jake, It would be crazy to make public the twists with this filing. Corti is mission critical, and anything they publish will be devoured by MNK, which is now a stronger competitor than before.
Info on this filing should be thought of as family jewels. You do not want thieves to know what you have.
Just keep your fingers crossed that they can file and not have the FDA slow it down, with a request for more testing, for example.
Jake and others. You all understandably would like more information from the company. However, whether it's complaining to fellow small shareholders on a board like this, or calling IR at the company, the reality is you are not going to get any significant information ahead of a public anouncement.
And what exactly would they announce in advance of an earnings call in November? Don't worry? Feel good? Here's information on our Corti filing and drug development plans that others don't know because you called IR?
The reality is that since 2000, the SEC's Reg FD (fair diclosure) flat out prohibits giving information to anyone outside of public announcements. Takes the fun out of it a bit, but if any IR Department violates that there could be litigation, so all you get, if anything, is pap. Unfortunately, shareholders just need to stay put for now, and maybe swap recipes and horse tips until the call.
Not unexpectedly, MNK has filed a Chapter 11 reorganization plan. It's pre-packaged, meaning they have worked out settlements with major creditors, including all 50 states, most Opioid claimants, and CMS for the Medicaid suit.
The terms of these settlements are very favorable for MNK. Creditors have caved. MNK will be alive and kicking; only the shareholders lose, but they were in the toilet anyway.
For those of us with ANIP shares, MNK is in a much stronger position to continue Acthar development and marketing as a competitor with Corti, when Corti is eventually approved.
From the Release: "The current consolidated cash balance of the Chapter 11 filing entities is more than $650 million. Together with cash generated from ongoing operations, this is expected to provide ample liquidity to support continued operations during the court-supervised process.The Company has filed a number of customary motions seeking court authorization to continue to support its business operations during the court-supervised process, including the continued payment of employee wages and benefits without interruption."
The Release also states: "The Company will continue to evaluate strategic options for the Specialty Generics business at an appropriate time and when market conditions are favorable." My interpretation: MNK has total flexibility, with no time pressure, to work a deal with a strong partner for Acthar at some point. In exchange for a share of license rights, MNK would use the cash (1) to differentiate Acthar with safety trials and label expansion, and (2) to lower pricing a bit, which they can make up with their new subscription approach to sales.
The press release with details is at this link.
https://www.prnewswire.com/news-releases/mallinckrodt-secures-broad-consensus-with-key-stakeholders-on-comprehensive-chapter-11-restructuring-301149931.html
Fair comment, and politely expressed.
Agreed.
Coot, I hope you are right.
What the Democrats decided, even before DJT was elected, was that they would not respect a fair election. We have essentially had four years of unrelenting attempted coup, between the illegal surveillance, the Russia hoax, the Kavanaugh circus, impeachment, and now encouragament (and funding) of violent uprisings and a Marxist organization.
I have zero confidence that this will be a fairly conducted election. This is the playbook of revolution to make the US a one-party state.
Hi Catty,
Hoping we ANIP owners have the thrill of victory one of these days. We have certainly had our share of the "agony of defeat."
Beyond stocks, I'm so discouraged after last night's "debate." I've dealt with a lot of real estate developers over the years, so the president's bluster is not unusual to me. It's just a means developers use to communicate, because the party on the other side is usually hostile. Unfortunately, that's totally foreign and scares away people who have more gentle lives.
I can't imagine one suburban housewife who would have said "Vote Trump" after last night. They teach their kids not to interupt (at least they used to). When it gets to the point that a lamb like Chris Wallace has to admonish the president (twice), he just went too far.
And the president forgot so many good things to describe that could have swayed the few undecideds. He is standing up to China, a serious military rival; he's getting the Germans and French, who have mooched off us since the Marshall plan, to chip in a little more for their defense. He has neutered Iranian nuclear plans with economic, not military, might; he has sponsored a landmark Mideast peace deal; his judgment about Syria and not needing to support Kurds in their fight with Turkey did not result in a Kurdish bloodbath, as liberals predicted; he was shrewd and got more of our soldiers out of that pesthole. Why not point out that his reviled "tax cut" simply brought taxes on our businesses in line with what foreign companies pay?
With all this great stuff, he talks instead about nominating 300 judges? The average voter who is not already in his camp could care less. I honestly think he underestimated Biden and got rattled.
Terrible night.
After last night's jejeune performance by the president, I'll still vote for him, but think Biden will win. The Senate may even flip.
The market seems not to be gripped wih inordinate fear this morning, and some of this may be the balanced and mature performance of Biden last night. He disavowed the Green New Deal and said that Medicare for All is not his platform. He was in command. "I am the Democratic Party." Whether a Trojan horse or moderate leader, time will tell, but he did not appear like a drooling fool as Trump had expected.
How will this affect the market, and ANIP? After last night, I'm thinking the market might actually like the idea of the fiscal stimulus which an all-Democrat government, led by a "moderate" Biden, will adopt. The dollar will be someone else's worry in their view. Small companies might actually benefit in a FOMO stampede. Good for ANIP.
However, as I wrote earlier, ANIP will pay more taxes and China has a better chance of continuing its quasi-dominance in making our US drugs; fighting China is not a big item on Biden's agenda. I'm also not sure that the "moderate" image portrayed last night was anything more than skillful dissembling.
Overall, I'm still thinking the negatives for us outweigh the positives with a Biden win, but his performance last night (and it was a win for anyone but a strong Trump partisan) has taken some of the fear of Biden out of the market.
Two interesting topics, MNK Chapter 11 and politics. They each affect ANIP.
MNK: Chapter 11 became inevitable as soon as the appeals court refused in June to stay the lower court verdict for the $600B judgment for CMS on Medicare overpricing. I wonder why it took that long. There's no point in bending over backwards with unreasonable creditors (CMS and the Opioid litigants) to protect MNK shareholders when the price is flirting with Zero. Go into Chapter 11 reorganization and negotiate from there. For us at ANIP, my fear continues to be that MNK will work out a deal with a stronger hand and give that 3rd party rights for Acthar, but that will take some time. For the next year (at least) Acthar will be in limbo until the CMS appeal is resolved. A game changer for MNK would be to win the appeal from the CMS 600B verdict. I've read the briefs and think the court will conclude that CMS, at best, had the right to second guess Acthar pricing from 2016 on, not from 2012 on. One way or the other, we will continue to compete with Acthar.
Politics: I'm probably in the minority as a pro-Trump guy, but putting that aside and tryng to be objective, I believe the Biden presidency will hurt us. We pay corporate taxes, and paying more taxes under a Biden "reform" will hurt revenue. I also see the Biden presidency as being much weaker on China trade issues, whereas Trump wants drug supply chains moved to the US. They each want lower drug prices, so it's neutral on that front. Overall, I gauge Trump as a better candidate for ANIP shareholders, but by a small margin. ANIP will sink or swim based on Corti approval, for which I have no knowledge.
Jake, Impossible to know to a certainty and public shareholders in a pharma won't have access to this type of information. This is way to important for our business to be disseminating it through public channels.
You just need to ask, in the words of the great one, "Do you feel lucky?"
I do. It's a character flaw.
I'm off for a hike now. Get away from the computer. Too nice a day.
Jake and others,
I wouldn't worry too much about Mangrove selling. Their business plan is more geared to trading oppotunities. They were owners of our convertible debt, and undoubtedly made a lot of money shorting over the years. Companies like Mangrove won't hold common shares on the same terms as others for the long haul.
Hello to all by the way. My "ignore" feature wasn't working, and I saw the typically semi-literate insults from Jeff. I hope his views are his alone, but the internet brings out the beast in people lacking success in their real lives. I'll see if I can get the ignore button to work again.
As for ANIP trading, candor is important. I wish more posters observed this. My calls are in the toilet come October 15. However, at this price, ANIP is fairly valued, so I've picked up some shares, but not as many as I had. I expect improvements with Lalwani, but not before he does what new CEOs usually do: scrub the company for anything overvalued and get rid of it. The next quarterly call may reveal that, but people usually breathe a sigh of relief.
About Lalwani, he better be good. I will say that I was shocked at the amount of his "inducement grant." Options for 179,643 shares @$29, vesting over 4 years in 25% increments and expiration after 10 years. What was especially shocking (to me) is that shareholders had just authorized 1.1M shares for employee grants, and that this 179,643 was outside that allotment. Those ANIP directors love to give away our stock. I hope this gets earned.
Be well everyone. The stable had a 2nd at Churchill Downs a week ago, and a win at Belmont on Friday. Still no one allowed in the stands, but let's hope that we turn the corner on Covid-19 soon.
Shooting the breeze about stocks, because we are in an information gap for ANIP. Only good natured persons invited. (Opposing views welcome, if politely expressed.)
I just read a distrurbing story in the Boston Business Journal. Here's the first paragraph:
"Massachusetts employers believe that nearly half of their workforces will continue to work remotely after a Covid-19 vaccine is made available, according to a new survey, a projection that could carry major implications for commercial real estate in Greater Boston."
This is really not a surprise to me or probably to you. I've been paying rent for an unoccupied office suite since March, and we are having record revenues because we are very efficient working from homes. I suppose I will keep paying rent, but forget about expanding to the next floor. I'm probably not alone with that thinking.
What keeps us in business? Remote accessibility to our files. With our IT provider and the Cloud, the key lynchpin seems to be Citrix software.
Ticker is CTXS, and it has retreated from absurd highs. Seems very reasonable now, and here is the kicker and why I am buying a lot. They are changing to subscription model, which depresses earnings in the short term, but is a long term recipe for growth. (Think Adobe; think Microsoft.)
No guaranties. Go out and play. Sunny day but I am stuck inside waiting for a call.
Best,
LD
Jake,
You should be buying Facebook instead of typing to me. It has the greatest growth potential. It's a bargain, even at the $300 mark it just crossed.
My law practice these days mostly involves very large companies, but I still have small company clients for whom I have great loyalties, and they all seem to use Facebook as their business platform. When it comes to pricing decisions, Facebook is the one they do not want to cut.
There's been a lot of political chaff thrown at Mark Z, which will continue with all of these companies.
I like the way Mark Z responds (or doesn't) and I am very fond of a company ruled by its founder, rather than by the sycophant CEOs and stooge Board appointees who often take over our great public companies.
Lawn Ranger
Great handle. I'm LordDarley on Seeking Alpha, too. I go there more often than Barrons, and post for amusement (not profit), and relief from the daily calls and work for my law practice.
The format for iHub was a little easier and more fun, but it only takes one stinker to spoil a party. Most of the posters here are nice, and like all of us are wondering what the "f" happened to our great little company. I'm still hoping for that day with a great bit of news, and hope we have finally hit bottom.
Dear Jake and others, even Mr. CrankyPants.
I've missed you, but am happy to do a little victory lap with Facebook after my crushing defeat with ANIP. It's almost gotten me even. The kid from Harvard is one of the best CEOs on the planet.
I think I've mentioned this already, but to repeat. Lord D is proud owner of some newly purchased shares, although I dare not reveal the quantity, lest a person we know will respond with a semi-literate PAGE OF BOLD TYPE .
I unfortunately do expect my October 60's to expire worthless. Can't catch a bid even for 80 cents.
What is it about ANIP? Varsity management, finally, instead of the country club from Radnor, PA, although they remain our largest owner.
Hope springs eternal. Or, to express it other ways, crooks return to the scene of a crime and no one can resist looking at an auto wreck.
Good luck all. This stock will eventually go up (significantly) as Wall Street develops confidence.
Dear Catty,
I can't keep posting here. It's common sense with all this negativity. I have a real business with employees who depend on me. I should not be spilling my guts about a bad investment to strangers on the internet. (But it's better for my liver than a third bourbon.)
I hope we can stay in touch. You seem like a very kind person.
Racing news update.
We had a great win in KY last week, but our main hope, a 3 year old colt who has better breeding than I, finished midpack in Saratoga on Saturday. He came back healthy, but he's a puzzle.
Best,
LD
My best to all. I'll be posting solely on Seeking Alpha at this point.
Catty, I'll miss you, and a few others.
LD
Shouldn't be typing with a phone in my ear.
The third paragraph had minor typos and should read:
"They each get 7,421 restricted shares which will vest at 50% on 8/5/2021 and 50% on 8/5/2022. They can pay ordinary taxes on the value at the time of vesting, or pay all the taxes now (even though unvested) with an IRC 83(b) election at $31/share. (New: They have 30 days to make this tax election.) We can't find out if they elected to pay the taxes early, but it would be a smart move because profit over $31 (not $30, as first typed) would then be capital gain." Note: the option expiration date does not apply to these restricted shares, which simply require staying on the board for two years.
Good luck. These directors do have allignment with our interests. I feel better paying for them (with real credentials) than the old crony of Brown's who was just overhead.
A bit more info on the insider ownership.
The Walsh purchase of 10,000 shares at a little over $30/share was very encouraging. It's the first purchase with real money that I can recall by an officer or director.
The other "purchases" are really free grants to new directors Thoma and Pera. They did not go into their pocket for these, so I don't give as much weight to those transactions. (They are called "purchases" because any sale within 6 months of any shares would trigger automatic insider short-swing liability under Rule 16b-3).
Although the new directors get these shares just for showing up, it's helpful to see what attracted them.
They each get 7,421 restricted shares which will vest at 50% on 8/5/2021 and 50% on 8/5/2022. They can pay ordinary taxes on the value at the time of vesting, or pay all the taxes now (even though unvested) with an IRC 83(b) election at $31/share. We can't find out if they elected to pay the taxes early, but it would be a smart move because profit over $30 would then be capital gain. If they do not exercise by 8/5/2029, the options expire worthless.
They also each get options on 16,024 shares exercisable at $31/share. These vest on the same two year schedule. When they do exercise the options, they will pay ordinary tax on any profit at the time. If not exercised by 8/5/2029 they expire worthless.
Jake,
I couldn't resist and checked the Form 4. Those are Code "P's"
Very positive.
Pat Walsh bought 10,000 shares on the open market for a little over $30/share. These were not freebies through a compensation plan, but purchases with real money, just like us. This will be recognized.
Back to my bunker.
Jake,
If there are "P"s in the form 4s, that's positive.
Too busy for me. Realistcally, I'm stretched in my real life for an IPO about to go on the Street in a few weeks.
ANIP is small beans for me, but I'm still interested. Silly fantasy I'll recoup lossses for purchases at $60 on average. Idiot.
I'll rely on you to follow up and will be in a bunker for the next week or so. You are doing the necessary math. Science is intriguing, but a fool's errand. I appreciate the science from others on the board - Libigel, etc.- but it's pretty clear it has no value for investing bunch. It's all about CORTI.
Jake,
Not so sure I share your enthusiasm on this. If I read this correctly these are just Code "A" purchases, meaning free stuff.
With Form 4s, you want to see the magic "P", meaning the officer wrote a check.
I am convinced we will all get rewarded, but need to give the recent very positive changes in management some time to sink in with Wall Street. I'll confess I am impressed (and a bit surprised) at the resume of the new CEO. The Board was true to its word, and executives like this do not move unless they see opportunity.
As for the "internal restructuring" of the Corti team, I do not regret the $400k expense associated with that. Good riddance.
I'm a bit worried about MNK chapter 11. Short-sighted people think that would be a plus for CORTI.
Exactly the opposite.
Our best scenario is an MNK crippled with debt trying to stay out of bankruptcy.
With a reorganization, it will be easier for MNK to attract a strong partner for Acthar who could lower prices and pour more money into safety testing and label expansion for the "name brand."
All that being said, Corti will be a money maker, but with a deferred pay date and more competition from Acthar than Arthur envisioned.
Don't be too impressed. Like any horseplayer, I'm only talking about my winners. My ANIP calls will probably expire worthless.
I've been buying back some of the ANIP shares I sold earlier. Using the FB and gold-related profits from the earlier ANIP sales proceeds. (Once in a while, I get it right.)
I am very impressed with the company's progress in the last month. The new CEO is a credible presence in the industry, and more directors with real credentials is a positive sign. The hiring of a professional IR firm will pay dividends in terms of interest on the Street.
Finally, a real conference call, with analyst questions answered frankly with a subsequent written transcript, was very welcome.
There is no question that the company was caught by suprise with an RTF letter that could not be addressed in a 30 day meeting, as Art and Ginski expected.
I think Pat is doing a good job from the little I see, and suspect there is no world class CEO in the wings and that Pat will agree to continue with some sweeteners.
There is probably a longer path to Corti approval than anyone would like, but the company should be worth more than today's price if there is even a dollop of good news or, frankly, some honest projections to give investors a feeling that guidance will be better in the future.
As for why Art's contract was continued with such favorable terms, the Board was in the dark and accepting Art's story without skepticism. That happens with boards of all sizes of companies and is not unique to ANIP. Just ask Boeing and Wells Fargo shareholders about their Boards.
Oh shoot.
Ginski is gone?
More fortification, unforunately, for my 180 degree turn on the stock when I learned about Arthur and then the RTF letter.
I was so optimistic with the Barron's article and Arthur's Kool-Aid.
Horrible judgment on my part. Only myself to blame, because I usually do not get swept in by stories. For those who are early stage, no problem. You did well. It's only late investors who will get clobbered.
Very hard to imagine anything positive at this point. Of course, when things are this negative, something could ignite juices, but not mine.
My experience with IR firms for small public companies is clearly not as extensive as yours. (<:
"It’s no secret that many smaller or newly public companies outsource their entire IR function to consulting agencies – yet many of those that rely almost exclusively on external IR help aren’t exactly advertising the fact. ‘Companies don’t want to stand up and say, I’ve outsourced one of my most important relationships,’ explains Greg Miller, associate professor of accounting at the University of Michigan’s Ross School of Business."
Jake, I was pretty clear about my waving the white feather on ANIP. For ANIP it's 10:1 for a score, with a payoff of only 3:1. No paddy bookie I know would take that, and I know a lot of paddies at the track with my travels.
Very hard with investing to take a loss. When I look at the odds for FB, and my other major plays, WY, Gold (physical, miners, and the ETF), agricultural real estate, I just have to write off the stupid ANIP pick. Barrons Round table and its Oscar Schafer gave me a bum steer.
Hope you followed my lead and bought FB with a little spare change.
Jake, trying to find gold in these little shit companies works 10% of the time. If you are a good VC before they are public, you hit 20%.
I think you are young enough to take some lumps and go on. I'm expecting my options to zero out, but if you really want to stay with the company, sell it all (like I did) and buy some long dated calls. Invest the balance in blue chips with moats and smart and responsible management. Zuck at FB is unbelievable. Why not invest in proven talent; ANIP's best hope is Pat, who can sell the company. I doubt they can get anything better, but jury is out on that.
Jake, I'm afraid it's a nothingburger for anyone but early stage owners.
Jake,
These are fine steps, but without a live CORTI application, ANIP is just a small company in Baudette, MN, where all women are beautiful, and all children above average, and where investors go to die.
Probably worth more than trading price, but no pot of gold.
Thanks for that observation.
Not sure I see much in this.
It seems like they will be spending a little extra money to outsource the IR function. Not unusual with small companies.
I'd be more encouraged if they allowed for printed transcripts of the CCs (like most companies with nothing to hide), instead of dial-in recordings that erase in a week.
LD
Jake, Although it's a good hunch that Arthur hasn't sold, I'm not sure you have the information to state that. He's not an insider anymore.
There are many applicable rules that might prevent his selling, the main one being if he has special knowledge the public does not have, i.e. the contents of the RTF letter. He risks liability if he buys or sells in that event. But his decision would not trigger a Form 4 filing.
He also has a short swing requirement not to sell or buy opposite a contrary action in the last six months, but he hasn't made purchases or sales (or gotten new grants) within the last 6 months.
My guess is that he hasn't sold, but there is no public info to back that up to my knowledge.
Jake, Your price range might be a little conservative on the high end, but it's not unrealistic. I'm counting on some decent news and a little emotion. I'm not sure what kind of head wind we will have with the new Executive Order.
Jake,
What Corti will do is make it necessary for the owner of Acthar to lower its price to where it can still capture most of the market.
The basic business plan for Corti was that Acthar would always be sold at nosebleed prices. Somewhat unrealistic in a market economy. But Corti is so cheap - about $70M with the rest of it already expensed, it can sell at a low price.
What I think will happen is that the Acthar owner (MNK or partner) will stay way ahead in safety testing and, with a brand name and aggressive marketing, continue to keep most of the market.
Still room for ANIP, but it needs a strong partner for the product so that it can catch up in safety testing and expand the market. Will take a few years and money to the ANIP partner.
Jake, Once in a while, if you laugh hard enough, stuff comes out your nose.
If you would like to think the owner of Acthar (whoever it will be) will decide to get along with a competitor, instead of relying on better testing and a 200+ sales force, that's your call. Thanks for lightening an otherwise dull day.
About MNK. To repeat myself. The nightmare for ANIP is if someone else, with more capital, takes over the Acthar franchise.
Stupid people delight about MNK demise, but they must be the types who play checkers instead of chess.